State ex rel. Miller v. Taylor

• Decision Date: 29 December 1913
• Citation: 145 N.W. 425,27 N.D. 77
• Court: North Dakota Supreme Court

145 N.W. 425

27 N.D. 77

STATE OF NORTH DAKOTA EX REL. ANDREW MILLER, Attorney General, and Max Stern, Relator, v. WALTER C. TAYLOR, Commissioner of Insurance of the State of North Dakota, and as such Commissioner of Insurance, Gunder Olson, State Treasurer of the State of North Dakota, and as such Treasurer

Supreme Court of North Dakota

December 29, 1913

Rehearing denied February 11, 1914.

Original application to this Court for the issuance of its writ prohibiting and enjoining the Commissioner of Insurance of the State from putting into effect the provisions of chap 194, Laws of North Dakota for 1913, requiring him to establish a bonding department to go into operation on the 1st day of January, 1914.

Writ granted.

Lawrence & Murphy and Pierce, Tenneson, & Cupler, and Bangs, Metcher, & Hamilton, for plaintiffs.

It is clear that the state intended to engage in the business of furnishing bonds to counties and other subdivisions, to indemnify against loss by the default of public officials of such subdivisions. Laws of 1913, chap. 194.

Such act is in violation of § 185 of the Constitution of this state. It is also in violation of §§ 1 and 23 of our Constitution. Rippe v. Becker, 56 Minn. 100, 22 L.R.A. 857, 57 N.W. 331; Opinion of Justices, 155 Mass. 598 15 L.R.A. 809, 30 N.E. 1142; Crawfordsville v Braden, 130 Ind. 149, 14 L.R.A. 268, 30 Am. St. Rep. 214, 28 N.E. 849; McCullough v. Brown, 41 S.C. 220, 23 L.R.A. 410, 19 S.E. 458; 1 Bl. Com. 138; Re Jacobs, 98 N.Y. 98, 50 Am. Rep. 636; Cooley, Const. Lim. 4th ed. 719; Butchers' Union S. H. & L. S. L. Co. v. Crescent City L. S. L. & S. H. Co. 111 U.S. 756, 28 L.Ed. 590, 4 S.Ct. 652; George Bolln Co. v. North Platte Valley Irrig. Co. 19 Wyo. 542, 39 L.R.A.(N.S.) 868, 121 P. 22.

The law or bonding act under consideration is discriminating, in that it requires only certain county officials to furnish bond with the state as surety, permitting others to take such bonds at their option; permitting the state to withdraw from any bond, and refusing to become surety on any bond greater than a given amount. State ex rel. McKell v. Robins, 71 Ohio St. 273, 69 L.R.A. 427, 73 N.E. 470, 2 Ann. Cas. 485; George Bolln Co. v. North Platte Valley Irrig. Co. 19 Wyo. 542, 39 L.R.A.(N.S.) 868, 121 P. 22.

This act is also in violation of the Federal Constitution, in that it takes property without due process of law. F. Const. 14th Amend. § 1.

Andrew Miller, Attorney General, John Carmody, and Alfred Zuger, Assistant Attorneys General, for defendants.

There is no constitutional provision in this state requiring any officer to furnish bonds. Those officers of whom bonds are required come under the provisions of statute law. Rev. Codes 1905, §§ 400--415, and amendments.

In the absence of a constitutional provision, the legislature has the right to prescribe qualifications for office, such as taking oath and giving bond, etc. 29 Cyc. 1375.

The state Constitution is a limitation of power, and the legislature has supreme power except where limited. Cooley, Const. Lim. 7th ed. 242; Ensley Development Co. v. Powell, 147 Ala. 300, 40 So. 137; Sheehan v. Scott, 145 Cal. 684, 79 P. 350; McGuire v. Chicago, B. & Q. R. Co. 131 Iowa 340, 33 L.R.A.(N.S.) 706, 108 N.W. 902.

The legislature has power to enact any law not prohibited by the Constitution. Ex parte Roberts, 166 Mo. 207, 65 S.W. 726; Radcliff v. Wichita Union Stock-Yards Co. 74 Kan. 1, 6 L.R.A.(N.S.) 834, 118 Am. St. Rep. 298, 86 P. 150, 10 Ann. Cas. 1016; Hinton v. Perry County, 84 Miss. 536, 36 So. 565; State ex rel. Henson v. Sheppard, 192 Mo. 497, 91 S.W. 477; Wallace v. Reno, 27 Nev. 71, 63 L.R.A. 337, 103 Am. St. Rep. 747, 73 P. 528; Ex parte Boyce, 27 Nev. 299, 65 L.R.A. 47, 75 P. 1, 1 Ann. Cas. 66; Com. v. Mallet, 27 Pa. S.Ct. 41; Re Watson, 17 S.D. 486, 97 N.W. 463, 2 Ann. Cas. 321; People v. Young, 18 A.D. 162, 45 N.Y.S. 772; State ex rel. Nichols v. Cherry, 22 Utah 1, 60 P. 1103; Rippe v. Becker, 56 Minn. 100, 22 L.R.A. 857, 57 N.W. 331; Missouri River Power Co. v. Steele, 32 Mont. 433, 80 P. 1093.

SPALDING Ch. J. BURKE, J., (dissenting).

OPINION

SPALDING, Ch. J.

This is an original application to this court for the issuance of its prerogative writ to prohibit and enjoin the state commissioner of insurance from proceeding to establish and put into operation a state bonding department. It is designed to test the constitutionality of chapter 194 of the Laws of 1913, entitled, "An Act Establishing a State Bonding Department in the Office of the Commissioner of Insurance, Providing for the Maintenance Thereof, and Creating a Reserve Therefor; Prescribing the Duties of Officers Connected Therewith, Providing for the Payment of Premiums and of Indemnities for Losses, and Providing for the Disposal of the Surplus after Said Reserve Has Been Created."

Section 1 of such act reads: "A bonding department of the state of North Dakota is hereby established, under the management and supervision of the commissioner of insurance." Section 2 authorizes the commissioner of insurance to appoint a deputy and engage clerks as may be necessary to conduct the business of the state bonding department, fix the salaries therefor, and provides that they shall be paid out of the bonding department fund. Section 3 requires such bonding department to bond counties, cities towns, townships, and school districts in any county in the state, against losses by default of any officer, upon the terms and in the manner later set forth in such act, and that the commissioner shall draw up, with the assistance of the attorney general, a standard form of surety bond, which only shall be used. Section 4 provides that each county official, except justice of the peace and constable, every assessor required by law to furnish a bond, every city, town, school district, and township treasurer required by law to furnish a bond, shall be bonded by the state bonding department, with this proviso, that it shall not bond any official for a greater amount than $ 50,000, and any official required to be bonded in a greater sum than $ 50,000 shall bond, as to the excess, with a responsible surety company, or in any manner satisfactory to the proper authorities. It further makes it optional with township and school district treasurers, to be bonded by the state bonding department, and requires the premiums on all bonds furnished by that department to be paid out of the appropriate public treasury. Section 5 fixes a flat rate of premium on bonds of all officers at 25 cents per hundred dollars of bonds per year, to be paid in advance by the proper authorities to the state treasurer, and that the minimum premium on small and short term officers' bonds shall not be less than $ 2.50. Section 6 provides that money paid into the state treasury for premiums for bonding officials shall be known as the state bonding department fund, and used as provided in the act. Section 7 prescribes the duties of the state treasurer in regard to receiving premiums and issuing receipts, etc. Section 8 requires all bonds issued by the department to run until the expiration of the officer's term of office, and provides that, when such term is less than one year, a full year's premium shall be charged. Section 9 requires the commissioner of insurance to estimate, at the beginning of each year, the amount required for salaries and expenses of the department for the current year, and to reserve the same from the premiums received, and makes the amount of premium receipts remaining available for payment of losses. It requires losses to be paid promptly as soon as the amount shall be determined by the commissioner of insurance and a report thereof made, and that any sum remaining unexpended at the end of any year shall remain in the state bonding fund until the amount of $ 100,000 is accumulated, after which any excess over that sum shall be distributed to the various counties, etc., in proportion to the amount of premiums paid into the fund by the same, and that, in case there are not sufficient funds to meet the losses sustained after the reservation of expenses for the year, such losses shall be paid as funds are accumulated in the bonding fund by the collection of premiums. Section 10 provides for reports to be published and made to the governor and legislative assembly. Section 11 requires the commissioner to obtain from the various bonded officials annual statements of their receipts and disbursements, etc., verified by an officer, and provides how the commissioner shall verify such statements, and requires him to furnish application blanks to the proper officers. It then provides, that, if, in the opinion of the commissioner of insurance, "it is advisable for the safety of the state to reject an application for a bond, or cancel the bond of any official bonded, he shall submit such application, also the person's name whose bond he proposes to cancel, to the state auditing board, together with his reasons for rejecting or canceling the same, and if the auditing board rejects such application or cancels any bond, such official may bond in any manner satisfactory to the proper authorities of the city, village, school district, township, or county, as the case may be." It then provides for notice of the rejection of any application by the board being given to the official, and that before a bond is canceled the commissioner shall notify such person by registered mail, demanding from him a receipt thereof, and upon the return of such receipt, that the board shall cancel such bond six days thereafter, and that, when a default is reported, the commissioner shall carefully inquire into and investigate the same before the indemnity is paid; that the state examiner shall examine and check the accounts of a...